Irwins forced to shut down with loss of 56 jobs

The Leeds-based company became the latest casualty of the economic downturn after experiencing difficult trading conditions.

Administrators at KPMG are in the process of winding up the business. Work has stopped on 13 sites in Yorkshire and clients have been advised to look for an alternative contractor to complete the projects.

The 13 sites include The University of York, Lambert Memorial Hospital in Thirsk, Nostell Priory in Wakefield, Valley Park Children's Centre in Sheffield and the Travellers Rest in East Keswick.

The other eight sites are schools – Saxton Primary School in Tadcaster, Hucklow Primary School in Sheffield, Windmill Primary School in Leeds, Badsworth Primary School in Badsworth, St John the Baptist School in Mexborough, St Peter's School in Sheffield, Parson Cross School in Sheffield and St Joseph's School in Moorthorpe.

Mark Firmin, KPMG restructuring partner and joint administrator, said: "Irwins suffered a significant drop in turnover over recent months as a large proportion of its work related to public sector projects.

"Given the limited order book of the business, a sale was not a viable option and the company has had to be closed."

Commenting on the prospects for the construction sector, Mr Firmin said: "The public sector's austerity agenda is already being felt by construction businesses and the impact will deepen as the purse strings tighten."

He added that many projects put on hold around the election in May have now been released for completion, keeping some construction companies busy delivering work already tendered.

"However, the flow of new tenders is significantly lower than the levels seen even over the past couple of years, so in time work will decline, seriously straining cashflow at a number of businesses in this capital spend reliant industry."

Irwins' collapse follows the demise of bigger rivals Rok and Connaught.

Building and repairs firm Rok went into administration earlier this month, just two months after rival Connaught collapsed.

Rok, which fell into difficulties in meeting its financial obligations, revealed problems in August when it suspended finance director Ashley Martin and launched an investigation into the plumbing, heating and electrical unit.

Earlier this year, Connaught went into administration leading to about 1,400 redundancies.

A new report by PwC estimates that a further 100,000 jobs will be lost in the construction industry as a result of the Government's spending cuts.

PwC estimates that the fall-out from the cuts will reduce overall gross construction output by 4.5 per cent. Capital budgets across Government departments are expected to fall by 30 per cent and by 74 per cent for Communities and Local Government over the next five years.

PwC estimates The Schools Programme will be reduced by 60 per cent to 15.8bn over the next five years.

It added that the transport capital budget, seen as a driver for economic growth, will be cut by 11 per cent over the next four years.

Chris Temple, strategy partner at PwC, said: "It is inevitable that the recession and reduced capital spending by Government will give rise to casualties, as we have seen with Rok.

"There are a number of areas where construction companies must, as a matter of priority, respond decisively. It will focus urgent attention on a number of long-running themes and trends that have created barriers to greater efficiency in the UK construction sector. Only those businesses that are able to drive innovation and change are likely to survive and prosper."

The Treasury has indicated that it will outline new approaches to PFI procurement.

PwC said eliminating waste is a major opportunity to reduce costs and create more efficient processes.

It said that as much as two-thirds of deliveries to sites take place at the wrong time and that some 15 per cent of materials are wasted.

Labour productivity can be as low as 35 per cent compared to modern, highly efficient manufacturing industries that consistently achieve over 90 per cent.

Jonathan Hook, construction and housebuilding leader at PwC, said: "Many people in the industry feel that change is long overdue. Some of the immediate challenges facing the industry may well be resolved as a result of short-term measures that can be taken relatively easily, but not perhaps without some degree of pain.

"Companies need to plan for the probable cash outflows associated with a downturn in contracting volumes and monitor counter party risk carefully in respect of both clients and the supply chain."

He added that the spending review may provide the final push for an industry that has found it hard to make more profound structural changes.

Hospital hunt for new builder

North Yorkshire and York Primary Care Trust says it is "pulling out all the stops" to find a new contractor at the Lambert Memorial Hospital in Thirsk.

Patients will stay at the Friarage Hospital in Northallerton until the work is complete.

North Yorkshire county councillor for Thirsk, Gareth Dadd, said: "It is not just disappointing news but devastating for the whole community.

"I would urge the PCT to do whatever it can within its power to bring in a new contractor fast. The more we hear about contractors going bust and refurbishments not going to plan, the more the long-term future of the Lambert Hospital will be further feared for."